Broadcom sets up shareholder fight over Qualcomm’s board

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In this Thursday, Nov. 2, 2017, file photo, Broadcom CEO Hock Tan speaks as President Donald Trump listens during an event to announce the company is moving its global headquarters to the United States. On Monday, Broadcom fired another shot in its $103 billion effort to acquire Qualcomm by nominating a slate of directors for Qualcomm shareholders to vote upon at the communication chipmaker’s annual meeting in March 2018.

SAN JOSE — Chipmaker Broadcom ratcheted up the pressure Monday on Qualcomm in the biggest-ever takeover bid for a technology company, saying it will nominate a new slate of board directors for Qualcomm at that company’s annual meeting in March.

Broadcom Chief Executive Hock Tan said in a statement that his company would nominate 11 new directors to “give Qualcomm stockholders an opportunity to voice their disappointment with Qualcomm’s directors and their refusal to engage in discussions with us.”

Broadcom made an unsolicited bid for Qualcomm on Nov. 6 that valued the San Diego-based company at $70 a share, or $103 billion, making it the largest-ever proposed acquisition in the tech industry. The deal is potentially worth up to $130 billion if Qualcomm’s debt is taken into consideration.

But Broadcom’s announcement Monday sets up a potential proxy fight at Qualcomm’s next shareholders’ meeting, slated for March 6.

Broadcom’s proposed slate of Qualcomm directors is heavy with experience in the networking, communications and semiconductor industries. Nominees include Samih Elhage, former president of the mobile networks business group of Nokia; Gregorio Reyes, a former executive with National Semiconductor, Motorola, Fairchild Semiconductor and Eaton, and a former director at Seagate; and David Golden, managing partner at Revolution Ventures.

Broadcom said that to “ensure continuity,” if Qualcomm shareholders approve Broadcom’s board nominees, it would support expanding Qualcomm’s board to 14 members to include current Qualcomm directors Mark McLaughlin, Anthony Vinciquerra and Jeffrey Henderson.

Tan said he would rather see Qualcomm negotiate a truce and accept Broadcom’s offer, instead of having to take the fight over Qualcomm’s future to its shareholders.

“Although we are taking this step, it remains our strong preference to engage in a constructive dialogue with Qualcomm,” Tan said.

Qualcomm responded in a statement that it stands behind its board of directors, which includes Chief Executive Steve Mollenkopf; former CEO and current Chairman Paul Jacobs; and former long-time HP executive Ann Livermore. Qualcomm called Broadcom’s action on Monday a “blatant attempt” to gain control of the company.

“These nominees are inherently conflicted given Broadcom’s desire to acquire Qualcomm in a manner that dramatically undervalues Qualcomm to Broadcom’s benefit,” Qualcomm said.

Rex Crum is the senior web editor for the business section for The Mercury News and Bay Area News Group. He also writes about business and technology for the publications' print and web editions, and has covered business and technology for nearly two decades. A native of Seattle, he remains a diehard Seahawks and Mariners fan and is imparting his fandom to his Oakland-native wife and two young daughters.